Posts Tagged‘artificial scarcity’

You know who gets a ton of my money these days? Game publishers. Whilst they might not get the same amount per sale that they used to the amount I pump into the industry per year has rocketed up in direct correlation with my ability to pay. Nearly every game you see reviewed on here is purchased gladly with my own money and I would happily do the same with all forms of entertainment if they provided the same level of service that the games industry does. However my fellow Australian citizens will know the pain that we routinely endure here with delayed releases and high prices, so much so that our Parliament subpoenaed several major tech companies to have them explain themselves.

If I’m honest though I had thought the situation was getting a bit better, that was until I caught wind of this:

I saw the trailer for Cloud Atlas sometime last year and the concept instantly intrigued me. As someone who’s nascent years were spent idolizing The Matrix I’ve always been a fan of the Wachowskis’ work and so of course their latest movie was of particular interest. Since I’m on the mailing list for my local preferred cinema (Dendy, in case you’re wondering) I simply waited for the email announcing it. For months and months I waited to see something come out until I started hearing friends talking about how they had seen it already. Curious I checked my favourite Usenet site and lo and behold it was available, which mean only one thing.

That email I was waiting for arrived a couple days ago, 4 months after the original theatrical release in markets overseas. Now I know it’s not that hard to get a film approved in Australia nor is it that difficult to get it shipped over here (even if it was shot on film) so what could be the reason for such a long delay? As far as I can tell it’s the distributors holding onto their out dated business models in a digital era where they have to create artificial scarcity in order to try and bilk more money out of the end consumers. I’ve deliberately not seen movies in cinemas in the past due to shenanigans like this and Cloud Atlas is likely going to be the latest entry on my civil disobedience list.

I seriously can’t understand why movie studios continue with behaviour like this which is what drives customers to seek out other, illegitimate means of getting at their content. I am more than happy to pay (and, in the case of things like Cloud Atlas, at a premium) for content like this but I do not want my money going to businesses that fail to adapt their practices to the modern world. Artificial scarcity is right up there with restrictive DRM schemes in my book as they provide absolutely no benefit for the end user and only serve to make the illegitimate product better. Really when we’re hit from all sides with crap like this is it any surprise that we’re a big ole nation o pirates?

A decade ago many of my generation simply lacked the required disposable income in order to support their habits and piracy was the norm. We’ve all grown up now though with many of us having incomes that we could only dream of back then, enough for us to begin paying for the things we want. Indeed many of us are doing that where we’re able to but far too many industries are simply ignoring our spending habits in favour of sticking to their traditional business models. This isn’t sustainable for them and it frustrates me endlessly that we still have to deal with shit like this when it’s been proven that this Internet thing isn’t going away any time soon. So stop this artificial scarcity bullshit, embrace our ideals and I think you’ll find a torrent of new money heading in your direction. Enough so that you’ll wonder why you held such draconian views for so long.

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Betas are a tricky thing to get right. Realistically when you’re testing a beta product you’ve got a solid foundation of base functionality that you think is ready for prime time but you want to see how they’ll fair in the wild as there’s no way for you to catch all the bugs in the lab. Thus you’d want your product to get into the hands of as many users as you possibly could as that gives you the best chance to catch anything before you go prime time. Many companies now release beta versions of upcoming software for free to the general public in order to do this and for many of them it’s proven to work quite well. However more recently I’ve seen beta testing used as a way to promote a product rather than test it and the main way they do that is through artificial scarcity.

Rewind back to yonder days of 2004 and you’ll find me happily slogging away at my various exploits when a darkness forms on the horizon: World of Warcraft. After seeing many of the game play videos and demos before I was enamoured with the game long before it hit the retail shelves. You can then imagine my elation when I found out there was a competition for a treasured few closed beta invitations and not 10 minutes later had I entered. As it turns out I got in and promptly spent the next fortnight playing my way through the game and revelling in the new found exclusivity that it had granted me. Being a closed beta tester was something rather special and I spoke nothing of praise to all my friends about this upcoming game.

Come back to the present day and we can make parallels to the phenomenon that is #newtwitter. Starting out on the iPad as the official Twitter Client #newtwitter is an evolution in the service that Twitter is delivering, offering deeper integration with services that augment it and significantly jazzing up the interface. Initially it was only available to a select subset of the wider Twitter audience and strangely enough most of them appeared to be either influential Twitter users or those in the technology media. The reviews of the new Twitter client were nothing short of amazing and as the client has made its way around to more of the waiting public people have been more than eager to get their hands on it. Those carefully chosen beta testers at the start helped formed a positive image that’s helped keep any negativity at bay, even with their recent security problems.

This is in complete contrast to the uproar that was felt when Facebook unveiled its new user interface at the end of last year. Unlike the previous two examples the new Facebook interface was turned on all at once for every single user that visited the site. Immediately following this millions of users cried out in protest, despising the new design and the amount of information that was being presented to them. Instead of the new Facebook being something cool to be in on it proved to be enough of an annoyance to a group of people to cause a stir about it, rather than sing its praises.

The difference lies in the idea of artificial scarcity. You see there really wasn’t anything stopping Blizzard or Twitter from releasing their new product onto the wider world all at once as Facebook did however it was advantageous to them for numerous reasons. For both it allowed them to get a good idea of how their product would work in the wild and catch any major issues before release. Additionally the exclusivity granted to those few souls who got the new product early put them on a pedestal, something to be envied by those who were doing without. Thus the product that was already desirable becomes even more so because not everyone can have it. Doing a gradual release of the product also ensures that that air of exclusivity remains long after it’s released to the larger world as can be seen with #newtwitter.

I say all this because honestly, it works. As soon as I heard about #newtwitter I wanted in on it (mostly because it would be great blog fodder) and the fact that I couldn’t do anything to get it just made me want it all the more. I’ve also got quite a few applications on my phone that I signed up for simply because of the mystery and exclusivity they had, although I admit the fascination didn’t last long for them. Still the idea of a scarce product seems to work well even in the digital age where such restrictions are wholly artificial. Just like when say someone posts a teaser screenshot on Facebook sans URL to an upcoming web application.

I’m sure most of you knew what I was up to anyway 😉

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It’s no secret that I’m a big fan of location based technology. There’s just so much information available to us out there that the use of filters has become a given and whilst the big players do a good job of providing the general filters based on topics the lack of location based filters is part of what inspired me to create Geon in the first place. This coincides with the explosion in ubiquitous GPS technology which was still out of the hands of your average consumer only a decade ago. Without these cheap and plentiful devices Geon simply couldn’t exist as the information streams would lack the data I require to provide accurate results (I try to avoid fudging data as much as I can, but for blogs and news there’s really no alternative right now). As I’ve said before I’m not the only one looking to capitalize on this, and I’ll be far from the last.

However despite the enormous benefits that such cheap and ubiquitous technology provides there is a flip side to this coin that I don’t often talk about: location based restrictions.

If you cast your mind back about 15 years you’ll find yourself in a world with a technology that was on the cusp of being released: the Digital Versatile(Video) Disk. Designed from the get go to be a replacement for the aging magnetic tape based format VHS it was something of a slow burning success as sales of the older format continued to outstrip it until 7 years later. Unbeknownst to most there was a sinister side to this new highly durable high definition format, the Region Code. At its heart the Region Code was a lock to prevent you from playing DVDs that you might have purchased elsewhere, giving the media houses precise control of what was released where and when with no exceptions.

At the time I was a salesman at the Australian chain electronics store Dick Smith Electronics. I can clearly remember the time when DVDs began to take off and for the most part it was all good. However as time went on we started to get people in with various DVDs brought by friends from overseas or otherwise that just wouldn’t play in their newly purchased player. Whilst for the most part we were able to circumvent these issues by up-selling them to region free players it didn’t stop the flood of complaints about why they couldn’t play something that they had legitimately purchased. At the time I didn’t care enough to find out the exact reasons but recently a resurgence in these region locking principles has started to send me over the edge.

Take for instance Hulu, a free video streaming service. As a service I think its a great idea since I could get the shows I want on demand and the content producers still get paid since they can slap ads onto the feed. Additionally there’s a whole swath of analytics you can run on such a service that just isn’t available on commercial TV (like how many people have actually watched the show, not just a rough guess). Plus every so often some great pieces of work will find their way onto Hulu such as Carl Sagan’s Cosmos. If you dare click that link you’ll notice that it doesn’t go directly to Hulu itself and that’s for a good reason, the first comment there demonstrates my point exactly.

Hulu unfortunately isn’t available to anyone who is outside of the USA and they’ve taken quite an aggressive stance with making sure that people tricking their way into the service are locked out. Whilst the underlying technology might have changed (Geolocation vs Region Code) the rationale for doing so is the same. Right now the content providers overseas want to control the distribution of their media in order to create a kind of artificial scarcity. What this does is inflate the value of said content when they go to license it to other countries since they won’t be able to source it from anywhere else.

From a business point of view I, unfortunately, agree with them. They are merely trying to extract the largest amount of revenue possible from their investments and creating these scarcities on products is just one way for them to increase their bottom line. Additionally I can understand where the business model comes from as in the distant past such a scarcity was created by the mere fact that it took a long time to get media from one place to another. However this doesn’t excuse the fact that such a business model is becoming unviable and introducing artificial restrictions on products will only support them for so long.

Such behaviour is typical of the media companies as they’ve been dragged kicking and screaming through every technological revolution in the past 100 years. The good news is that despite their ranting and raving the barriers that they have put up in futile attempts to preserve their ancient business models are starting to come down with players like Apple (iTunes Store) pioneering the way. We’re probably still about 10 years away before big media rethinks their business model for the age of the Internet but at least, for now, there’s light at the end of this tunnel.